Bitfarms rejected a $950 million takeover proposal for Riot Platforms, citing an undervaluation

Bitfarms, a global Bitcoin mining company, confirmed on May 28 that it had received and rejected an acquisition proposal from Riot Platforms on April 22, 2024.

The proposal, offering $2.30 per share of Bitfarms common stock in cash and shares of Riot common stock, was evaluated by a Special Committee of the Bitfarms Board of Directors, composed entirely of independent directors.

Assessment by the Bitfarms special committee

Bitcoin mining company Bitfarms explained in a statement its decision to reject Riot Platforms’ takeover proposal.

According to the latest Bloomberg report, Riot’s offer includes, among others: a combination of cash and common stock, valuing Bitfarms at approximately $950 million in equity. This represents a premium of 24% over the monthly volume-weighted average share price of Bitfarms as of May 24, 2024.

The proposed acquisition is said to combine cash and Riot common stock, which would result in Bitfarms shareholders owning up to 17% of the combined entity. Riot said this proposal offers Bitfarms shareholders significant immediate value and future growth potential from a financially solid company led by a proven management team.

Riot proposes to acquire Bitfarms for $2.30 per share to create the world’s largest publicly traded Bitcoin miner.

Read the full press release here: https://t.co/SnBijrL3i7

Disclaimers can be found at: https://t.co/6RQFSK9MKb.

– Riot Platforms, Inc. (@RiotPlatforms) May 28, 2024

The initial proposal was privately submitted to the Bitfarms Board of Directors on April 22, 2024, but was rejected without substantive discussion. Riot has therefore decided to go public with the proposal, citing new allegations from a lawsuit filed by Bitfarms’ recently fired CEO that questions the commitment of some executives to shareholder interests.

However, Bitfarms established a Special Committee, consisting only of independent directors, which considered Riot’s proposal and concluded that is significantly “undervalued”. company and prospects for its future development.” To facilitate constructive discussions, the Select Committee requested Riot’s customary non-disclosure and non-solicitation agreements, but received no response.

A special committee is currently assessing the future direction of the company’s development.

“Once additional unsolicited expressions of interest are received, and each additional party enters into a customary confidentiality agreement, the special committee conducts a thorough review of strategic alternatives to ensure maximum shareholder value is achieved,” Bitfarms said.

The review may lead to a variety of outcomes, including the continuation of the current business plan, the conclusion of a strategic merger or business transaction, or the sale of the company.

Bitfarms faces a takeover bid from Riot amid management turmoil and a CEO lawsuit

Bitfarms believes that continuing to execute its growth plan will maximize shareholder value. The company’s overhaul and continuous operational improvements aim to position Bitfarms for sustainable growth and a better market position in the Bitcoin mining industry.

The takeover bid comes at a turbulent time for Bitfarms, which is undergoing management changes. Following the departure of Geoffrey Morphy, the company is in the process of searching for a new CEO. Initially, Morphy stayed with the company while looking for his successor.

On May 10, Morphy sued Bitfarms for breach of contract, wrongful dismissal and damages of $27 million. As a result, he was fired on May 13, and president and co-founder Nicolas Bonta was appointed interim CEO.